Surplus Theory On Pension Fund

[Narayanan Venkateshwaran]

surplus Theory or Adequate Theory? Adequacy may be more appropriate term.

There is conflicting stand between litigant pensioners and IBA on the issue.

Both of them to knowledge of majority have not  done an actuarial exercise  to prove their stand

Apparently the stand of pensioners is logical as the pension fund as it stands is meant to  last only  uptil the last of eligible candidate under old scheme survives.

Judiciary cannot be faulted if material evidences are lacking to facilitate proper judgement.

Written affidavit and counter affidavit without supporting documentary evidence will be of no avail

It is not known whether DFS have hidden agenda of preserving pension Fund  to have better bargaining power in their future bid to privatise Banks

If is true it is CRUEL on old pensioners

DFS have benefitted enormously while doing disinvestment .SO they have moral responsibilty.

If recapitalisation is possible to bail out sick banks sequel to bad debts, the exercise can be repeated for poor pensioners

Clause 11 of pension regulation casts responsibilty on each bank to do  assessment of pension account annually and make good shortfall if any

In the said scenario why not Banks be allowed to draw from corpus and make good any short fall in future if at all it arises

Banks cannot after all wallow in loss for time immemorial

IT IS HOPED THAT POINTS AS ABOVE ARE ALREADY WITH COUNSEL FOR LITIGANT PENSIONERS

Members please make your comments as well as supplement with more points

It will be nice if  one member of this group has direct access to the counsel or with those directly involved

[Sridhar Mandyam]

First question is who have contributed for pension fund? If pensioners have not contributed then pensioners have no right to claim payment from pension fund even if it is surplus.

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[Mani B]

If CPF balances that were kept with bank as trustees does not belong to employees but of banks, why and what made it as necessary for banks to obtain irrevocable authority letter for transferring the CPF balances with up-to-date interest to Pension Corpus. If the balances were belong to banks, they could have very well transferred them to corpus on thier own without obtaining irrevocable authority.

Bala

On Fri 30 Sep, 2022, 4:38 PM Mani B, <mani...@gmail.com> wrote:

Before and upto second option for pension, from the agreed common load decided under 7,8,9th BPS, s portion has been transferred to pension fund. Here, please note that PF optees benefits have gone to pension fund, as trf to pension fund consisits of both pension optees and PF optees. To that effect and extent PF optees were forced to sacrifice their mite for common cause. Banks seems to be not provided equal contribution of their part on those days. Further, while opting second option, in-service employees were forced to contribute 2.8 times of their pay of Nov 2007 and retired PF optees were forced to pay 156 % of their CPF settlement for getting pension. Here also it is doubtful whether banks have provided necessary funds said to be required as agreed upon. Perhaps these things might have been conveniently forgotten by you for your selective presentation.

Further, you may argue that CPF contribution belongs to bank and is not owned by employees. Please note that as per PF act bank is supposed to provide and earmark an equivalent amt of PF contribution of an employee and hold it as a trustee for making full and settlement on his superannuation, subject to certain service conditions. As per this the CPF balance of an employee naturally a credit balance due to drawn by him from his employer.

AND, THIS CPF BALANCE IS TRANSFERRED TO CREATE A CORPUS FUND, CALLED PENSION FUND, AFTER OBTAINING IRREVOCABLE LETTER OF UNDERTAKING, WHILE ACCEPTING PENSION OPTION, WHICH IS AGREED AS SECOND BENEFIT IN LIEU OF CPF. INITIAL CORPUS WAS FROM EMPLOYEES ONLY AND AT THAT TIME OF CREATION OF CORPUS BANKS DID NOT ALLOCATE ANY FUND TO THE CORPUS. ACCORDING TO EPR 1995 BANK HAD TO PROVIDE FUNDS EVERY YEAR AS PER ACTURIAL INVESTIGATIONS, AS THEY WERE PROVIDING FOR CPF. IT IS NOT AN OBLIGATION FOR BANKS BUT AN STATUTORY NEED AS PER AS 15 EVERY YEAR AND IS SUBJECT TO ANNUAL STATUTORY AUDIT OF THE BANK. FURTHER ANY RETURN OR SURPLUS ON INVESTMENT OF THIS FUND IS ALSO ADDED TO THE CORPUS OF THIS FUND AS PER EPR WHICH IS STATUTE IN NATURE AFTER PUBLICATION OF THE EPR IN OFFICIAL GAZETTE OF INDIA. THUS PROVIDING ADEQUATE FUNDS WHENEVER NECESSARY IS THE DUTY OF THE BANK, WHETHER THERE IS SURPLUS OR DEFICIT. 

PLEASE NOTE AND STOP TELLING / QUESTIONING WHO CONTRIBUTED FOR PENSION FUND.  

 Bala

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[Mani B]

Creation of pension corpus by transfering CPF balances of employees happened in the case of PSB employees only, since pension is a second benefit in lieu of CPF. The individual identify of employees through individual accounts for CPF is lost while creating pooled corpus fund for pension payments. Hence no individual pensioner can make any claim on his share in the corpus in his individual capacity but have a claim of right over the corpus fund as an entire group of beneficiaries .

But, in the case of SBI, pension is a third seperate benefit drawn out of pension fund created and maintained fully by the bank.

There lies the difference between the pension fund of PSB employees and that of SBI pensioers.

Bala 

[Mani B]

Before and upto second option for pension, from the agreed common load decided under 7,8,9th BPS, s portion has been transferred to pension fund. Here, please note that PF optees benefits have gone to pension fund, as trf to pension fund consisits of both pension optees and PF optees. To that effect and extent PF optees were forced to sacrifice their mite for common cause. Banks seems to be not provided equal contribution of their part on those days. Further, while opting second option, in-service employees were forced to contribute 2.8 times of their pay of Nov 2007 and retired PF optees were forced to pay 156 % of their CPF settlement for getting pension. Here also it is doubtful whether banks have provided necessary funds said to be required as agreed upon. Perhaps these things might have been conveniently forgotten by you for your selective presentation.

Further, you may argue that CPF contribution belongs to bank and is not owned by employees. Please note that as per PF act bank is supposed to provide and earmark an equivalent amt of PF contribution of an employee and hold it as a trustee for making full and settlement on his superannuation, subject to certain service conditions. As per this the CPF balance of an employee naturally a credit balance due to drawn by him from his employer.

AND, THIS CPF BALANCE IS TRANSFERRED TO CREATE A CORPUS FUND, CALLED PENSION FUND, AFTER OBTAINING IRREVOCABLE LETTER OF UNDERTAKING, WHILE ACCEPTING PENSION OPTION, WHICH IS AGREED AS SECOND BENEFIT IN LIEU OF CPF. INITIAL CORPUS WAS FROM EMPLOYEES ONLY AND AT THAT TIME OF CREATION OF CORPUS BANKS DID NOT ALLOCATE ANY FUND TO THE CORPUS. ACCORDING TO EPR 1995 BANK HAD TO PROVIDE FUNDS EVERY YEAR AS PER ACTURIAL INVESTIGATIONS, AS THEY WERE PROVIDING FOR CPF. IT IS NOT AN OBLIGATION FOR BANKS BUT AN STATUTORY NEED AS PER AS 15 EVERY YEAR AND IS SUBJECT TO ANNUAL STATUTORY AUDIT OF THE BANK. FURTHER ANY RETURN OR SURPLUS ON INVESTMENT OF THIS FUND IS ALSO ADDED TO THE CORPUS OF THIS FUND AS PER EPR WHICH IS STATUTE IN NATURE AFTER PUBLICATION OF THE EPR IN OFFICIAL GAZETTE OF INDIA. THUS PROVIDING ADEQUATE FUNDS WHENEVER NECESSARY IS THE DUTY OF THE BANK, WHETHER THERE IS SURPLUS OR DEFICIT. 

PLEASE NOTE AND STOP TELLING / QUESTIONING WHO CONTRIBUTED FOR PENSION FUND.  

 Bala

On Wed 28 Sep, 2022, 3:45 PM Sridhar Mandyam, <mandy...@gmail.com> wrote:

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[Sridhar Mandyam]

Sir,

Once one opted for pension scheme, one forfeits claim on pf. Why Bank should put them money in pension fund? Even then please calculate the return you would have got to the pension you are getting. 

In the same way a PF opted will say I have surrendered my pension so it should go to pension fund and I should be paid from that

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